EA’s Madden 2007 sells briskly, but are games gaining on movies?

Electronic Arts has released sales figures for Madden 2007, and they look rosy …

The video game industry and the movie industry have always had a strangely entwined relationship. Very early on one side was always desperate to court the other's attention and approval. A huge win for Atari, the pioneer of home video games, was an agreement to license the hit movie E.T.: The Extra-Terrestrial for their 2600 video game system. That game flopped, but video games based on movies have been a staple of the industry ever since, and the favor has been returned in recent years with movies like Tomb Raider and Doom.

Today we have a story from Reuters discussing Electronic Arts' new title Madden 2007. Sales have been strong for the latest entry in the venerable football series, reaching $100 million (approximately 2 million units) in its first week. News sites quickly compared these results to the latest movie earnings: it was more than Pixar's Cars which grossed $88 million in its first seven days, and slightly less than The DaVinci Code's take in the same time period.

It has been a popular pastime of many industry observers to compare hit video games sales to those of popular movies. The unspoken assumption is that the video game industry has come from nowhere and is now set to rocket ahead of its older entertainment cousin. But is this an accurate assessment? To find out, I went searching for some of the most popular video games and movies over the last couple of decades, starting in 1982, when Atari's sub-par rendition of Pac-Man for the 2600 still managed to sell nearly 7 million copies.

That effort was dwarfed by the movie success of E.T. (the video game version of E.T. was so terrible that most of the games were returned and eventually buried in a legendary landfill). However, the video game industry took the lead as early as 1990, when Super Mario Bros. 3 sold 17 million copies, and in terms of inflation-adjusted dollars, beat out blockbusters like Pretty Woman. (In fact, the original Super Mario Bros. sold even more, but it was bundled with the Nintendo Entertainment System and so did not qualify for my chart, which lists only unbundled games.)

After this early success, however, the gaming industry settled back into a rather steady state, with hit games such as Final Fantasy VII and Gran Turismo III selling an average of 10 million copies each, while movies such as 1997's Titanic gained super-blockbuster status. Even 2004's Halo 2, whose preorder sales of 2.4 million units spawned news stories about "the biggest day in entertainment history" faster than players in a deathmatch, ended up with only about 8 million copies sold.

Overall, the data shows that the movie industry and video game industry produce comparable revenues in terms of hit titles. Of course, movies earn more money from VHS and DVD sales, rentals, and merchandise (cue Spaceball's Yogurt to explain the importance of the latter). Video games, on the other hand, earn very little money from tie-ins and have to make back their investment on sales alone. And that investment is rising quickly.

Overall, this data does not paint a particularly rosy picture of the gaming industry. While lots of money is coming in, the costs to produce new titles is rising rapidly and sales figures are not rising to match. When you consider the amount of money spent to develop a title like Super Mario Bros. 3 versus what is being spent on Halo 3 today, it becomes even more important for the games industry to try and expand the market and appeal to more people.

This, of course, is one of the messages Nintendo has been trying to hammer home with their marketing for their upcoming Wii console. Whether or not they are successful in getting more people to play video games will likely have a major impact on where the industry goes in the future. The push for bigger, better, and shinier may have to be tempered by the reality of costs versus sales. For its part, Electronic Arts is pleased with sales of Madden—of course it helps that they have an exclusive contract with the NFL—but smaller firms may be more anxious in the years ahead.